Owning a home has been a cornerstone of the modern American Dream, and remains the surest path to building wealth for American families. There are plenty of pundits ready to explain how home equity grows over time, but the bottom line is that when a family rents their home, their dollars go one way – out. On the other hand, homeowners’ monthly mortgage payments are likely about the same as rent, but over time equity grows and turns into profit when the home is sold. According to the Federal Reserve’s Survey of Consumer Finances, the typical net worth of an American homeowner is close to $200,000, while a typical renters’ net worth is under $5,500.
First-Time Homebuyer Savings Account signed into law in Minnesota
The American Dream of homeownership just became a bit easier to achieve in Minnesota. Prompted by Housing First Minnesota (BATC’s advocacy division) and the Minnesota REALTORS®, the Minnesota legislature adopted a new law authorizing the First-Time Homebuyer Savings Account during their 2017 session. Families can start saving today and deduct 100 percent of the interest earned on the account from their Minnesota taxes.
Details for the new law are:
- Parents or grandparents can set up an account AND receive a deduction from their own state taxes
- Individuals can deposit money annually into a FDIC-insured savings account
- The account can be opened at any Minnesota bank or credit union
- Contributions to the account receive a state tax deduction on interest earned. Individuals can deposit up to $14,000 annually, while married joint filers can deposit up to $28,000 per year
- The plan applies to first-time homebuyers and those re-entering the housing market if they have not owned a home within three years
- Effective for taxable years beginning after December 31, 2016
Housing First Minnesota and the Minnesota REALTORS® launched the Minnesota Homeownership Initiative designed to help builders produce safe, durable homes at a price people can afford in communities they love. The first-time home buyers savings account was a key element of the initiative and was authored by Rep. Greg Davids (Preston) and Sen. Karin Housley (St. Mary’s Point).
The 2017 Fall Parade of Homes is sponsored by The Tile Shop.